“How many crystal balls do you need?” he asked. “I think the key word for 2008 is `Surprise.”‘

Wong added, “And there will be a lot of them.”

Wong differs with the views held by some experts, who compare the climate going into 2008 with that of the economic turbulence that rocked the 1970s: high gas prices in the wake of rising pressures on oil, inflation risks and an overseas conflict that is losing the support of the American people.

The ’70s were also a time when a rising power in Asia – Japan – outpaced the U.S. in product improvement and development, effectively “invading the American market, so to speak,” Wong said.

Some see China taking on that role, Wong said, adding that there are “some similarities between what we’ll see in ’08 and in the ’70s.”

But there are vast differences in today’s economic environment, both on global and local scales, that put the country on firmer footing that will likely prevent significant slippage, Wong said.

“I would think that we are probably in better shape than what we had in the ’70s,” Wong said.

Wong agrees that there is geopolitical uncertainty across several regions – the assassination and ensuing national election turbulence in Pakistan, the ongoing war in Iraq, and threats from Iran and North Korea.

“But the global economy is a lot stronger and the trade link is far more stable today than before,” he argues.

In the ’70s Japan was a singular economic power in Asia, while most countries in the West and East were struggling, he said.

Nowadays, European nations have combined to be a strong economic force along with the Euro currency, China is strong, and with other economies continuing to emerge, the trade-linked nations can share in the wealth, as well as the responsibility, Wong said.

That diversity not only puts many countries in position to benefit from global prosperity, it raises their stakes in it, Wong said.

“We’ve never been here,” he said. “In the past, if one link broke, then systems collapsed.”

But, he added, “We are in this very weird situation.”

Oil, homes and striking writers

Local economist Jack Kyser agrees with Perry that the nation, as well as the region, are entering unknown territories.

“You could have a major political instability in an oil-producing country that could cause the price of oil to really spike,” said Kyser, senior vice president and chief economist of the Los Angeles County Economic Development Corp.

And if the dollar continues to weaken, it could have negative consequences, but in turn it will have some benefits, Kyser said.

Tourism, particularly in Southern California and Long Beach, is expected to benefit from an influx of international travelers brought in by the advantageous exchange rates.

“It’s not uniformly bad news,” Kyser said.

Here are a four predictions from Kyser, who’s often referred to as “L.A.’s economic guru”:

1. “We’re looking for slower growth; we are on a recession watch,” Kyser said.

Kyser was quick to point out he is not forecasting a recession, but “there are a lot of things out there that could dump us over the edge into a recession.”

2. The Writer’s Guild of America strike may not be ending soon.

“That looks like it’s going to drag on,” Kyser said.

Kyser believes that whatever the outcome, the strike will change the face of television, and could even cause a drop in network viewers.

Tipping the strike in one direction, to a quick finish, or the other, could be the negotiations with the Directors Guild of America that are set to start this week.

“The length of the writer’s strike could depend on what happens with the directors guild,” Kyser said.

3. Housing is a problem, and is going to continue to be a problem.

“It’s going to be a mixed performance out there in Southern California,” Kyser said of the market.

In Orange County, not only will the housing crunch be more pronounced, but employment will be hurt because of the lack of new home construction.

“They are in an employment recession,” Kyser said. “Riverside County is going to be the eye of the storm in terms of housing problems. The problems will last into 2009 and in some areas it could be 2010.”

Kyser’s forecast calls for employment in Los Angeles County to rise a sluggish 0.7 percent. That’s down from the stagnant pace of 0.8 percent for 2007 and 1.7 percent in 2006.

Orange County’s employment picture is expected to slow to an almost nil 0.2 percent rate, slightly up from 0.1 percent last year and far below 2006’s 2 percent growth.

The forecast for the Riverside/San Bernardino area calls for a growth rate of 1.4 percent, putting the area’s normally rapidly expanding employment base down from 2.6 percent in 2007, and 4 percent in 2006.

Employment growth in Ventura County is expected to reach 0.3 percent for 2008, down from 0.8 percent and 2006 and 2.3 percent in 2006.

In San Diego County employment is expected to grow by 1 percent, up from 0.7 percent in 2006 and down from 1.4 percent a year before that.

Kyser attributes some of that employment growth to rebuilding efforts following the wildfires that rampaged San Diego County late last year.

The Trojan Horse, the merger and a shocker

Paul Bond, West Coast business editor at the Hollywood Reporter, has some predictions that many may feel are predictable, and he has one doozy.

1. “Blu-ray will win the DVD format war,” Bond said.

Bond reasons that the makers of the high-definition Blu-ray player have a secret weapon in Sony’s PlayStation3 video game.

“The PS3 is gaining huge traction and that is their Trojan Horse,” Bond said. “People have got (a Blu-ray player) whether they realize they have it or not or whether they use it or not.”

Movies in Blu-ray format are outselling the competing technology, HD-DVD, in videos that are formatted to their respective players at a ratio of 70-30, according to Bond.

Bond also believes that some of the film studios that have sat out the fight are tiring of watching the high-tech battle unfold.

“Hollywood is getting sick of this format war,” Bond added.

2. Bond’s next prediction is also a popular one: XM and Sirius will merge their satellite radio operations.

Some believe the merger will not withstand regulatory hurdles designed to prevent monopolies from being formed, but others say XM-Sirius (or Sirius-XM) would does not constitute a monopoly because there is plenty of competition for such a joint operation. Free radio, iPod-like devices and services, as well as Internet radio, can all be considered competitors, Bond said.

3. The digital video recorder (DVR) will gain even more popularity, Bond said.

“Everybody and their mother’s going to want one of these things sooner or later,” Bond said.

Why?

“People don’t want commercials,” is Bond’s short answer.

That downfall of growth in the DVR market could result in a fallout in the advertising-based free television market.

“Television executives are going to have to figure out how to deal with new business models,” Bond said.

4. Perhaps Bond’s most shocking prediction is that television audiences will drop off for the first time in history.

The proliferation of high-speed broadband is causing people to spend more time on the Internet, allowing people to get a broader range of information and at a quicker pace.

“Television audiences might shrink for the very first time in history,” Bond said. “We’re talking about big changes coming for the television industry.”

Will the Bull gore the

market Bear?

John Willett, owner Willett Financial Services, a Linsco Private Ledger affiliate based in downtown Long Beach, believes housing will fuel the market.

“In my opinion, the (Dow Jones Industrial Average) will reach an all-time high by the end of June,” Willett said.

One reason is the housing market, he said.

“The subprime problem is already on the mend,” Willett said.

He believes the credit industry and mortgage market are already dealing with the major issues being caused by rising foreclosures.

That’s why Willett believes confidence in the economy will return.

“The real estate market is going to be in a down position probably until the end of the year, and then it’s going to stay flat for five years, so where is that money going to go? It’s going to go to the stock market,” Willett said. “There is so much cash in this investment environment. It comes from oil sales, it comes from foreign countries and it comes from the federal government.”

Following an unexpected slump in trade through the ports in 2007, when imports grew just 0.4 percent for the year, economists are expecting a modest rebound this year.

While the number of imports is expected to grow only 1 percent in 2008, exporters will continue to see strong gains as foreign markets take advantage of the slumping U.S. dollar. After export growth of 17.3 percent in 2007, authorities expect an 18.5 percent jump this year in Los Angeles-Long Beach, fueled by strong demand in Europe, Japan and South America.

Still, even double-digit export growth won’t be enough to outstrip weak imports to significantly drive up total trade volumes. Exports account for only about 20 percent of total trade handled in L.A.-L.B.

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